5 funds to watch for 2026

As we head into 2026, investors once again face a world full of moving parts. Markets showed remarkable resilience in 2025, but uncertainty remains high. Inflation remains elevated in some countries, while interest rates are still settling and are expected to fall further in 2026. Geopolitical tensions persist, and elections across several major economies could add further volatility.

It might sound daunting, but periods of uncertainty often create some of the best opportunities for long-term investors. Trying to second-guess short-term market moves rarely pays off. Instead, making sure your portfolio is well balanced, across different regions, sectors, and asset types, can help smooth the ride through whatever comes next.

Market concentration has also remained a growing theme. A small number of large US companies have driven much of the market’s recent gains. While these firms have delivered impressive results and they still can if revenues continue to grow, it’s important to remember that diversification remains key. A broader approach can help reduce risk and uncover opportunities that may be overlooked elsewhere.

Here we highlight five funds covering a range of areas we think could be worth considering for the year ahead and beyond. Together they demonstrate that even in uncertain times, there are plenty of places to invest for the long term, and by this we mean at least five years.

Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made.

Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio. Once invested, it’s important investors check in on their portfolio from time to time, to make sure investments are still in line with their goals. For more details on each fund including its charges and risks, use the links to their factsheets and key investor information.

This isn’t personal advice or a recommendation to invest and remember all investments and any income they produce can fall as well as rise in value – you could get back less than you invest. Past performance is not a guide to future returns. If you’re not sure an investment is right for you, please seek advice.

Schroder Managed Balanced

With so many unknowns on the horizon, balance feels more important than ever. Investors have had to contend with fluctuating inflation, changing interest rate expectations and sharp swings in global stock markets. That’s before factoring in the impact of politics, elections and global events.

In this kind of environment, it can make sense to have an investment that’s spread across a range of assets. Multi-asset funds that blend shares, bonds and other investments aim to capture growth when markets rise but offer some shelter when they fall. They can also help reduce concentration risk in investor portfolios, plus you get a professional rebalancing the portfolio on your behalf.

Schroder Managed Balanced is a ‘fund of funds’. The managers primarily invest in funds run by other talented Schroder’s fund managers, although they can also invest outside of the Schroders range where necessary. Collectively, those managers invest in hundreds of different companies and bonds. This means the portfolio offers plenty of diversification.

The managers tend to favour shares when the economic environment is positive. But in times of stress, they shift to more diversified assets, such as bonds and cash, aiming to minimise losses. The managers also invest in alternative areas of the market and thematic funds, including gold.

Please note that the managers’ freedom to invest in high yield bonds, emerging markets and derivatives adds risk.

Asset allocation for the Schroder Managed Balanced fund

Source: Schroders, 31/10/2025.

JPMorgan Emerging Markets

Emerging markets have been somewhat in the shadows in recent years, while the US has dominated global returns. But that hasn’t always been the case and at some point, the balance could shift. Valuations in developing markets look appealing compared to their developed peers, and we think the long-term growth story remains intact. India, for example, has had a weaker year against some other markets following a period of strength, which could provide an opportunity especially as it’s still expected to become a dominant driver of global growth over time.

A key factor to watch in 2026 is the US dollar. If it continues to weaken, that could be good news for emerging markets. A softer dollar typically reduces the cost of debt for these economies and can encourage investment flows. Meanwhile, many emerging market consumers are becoming wealthier, driving demand for goods and services at home.

For investors looking to diversify and add long-term growth potential, emerging markets can play a valuable role within a balanced portfolio. Of course, this is still a higher-risk area, with political and economic challenges to consider.

JPMorgan Emerging Markets is managed by seasoned emerging markets investor Leon Eidelman, with the support of over 100 investment professionals across nine countries, giving them eyes in most corners of the market. Like many funds in the sector, it invests in some of the region’s largest countries including India and China, as well as smaller economies with unique opportunities, such as the Middle East, Turkey and Mexico.

Country allocation for the JPMorgan Emerging Markets fund

Source: JPMorgan, 31/10/2025.

T. Rowe Price Global Value Equity

Global equity funds form the backbone of many long-term portfolios. This makes sense as they provide access to companies across the world and help spread risk.

Within this space, value investing, which typically focuses on companies that appear undervalued relative to their long-term prospects, has struggled to keep up with the growth style in recent years. But styles move in cycles. After a long period where growth companies have led the way, value-focused businesses look relatively attractive. If markets shift towards a more fundamentals-driven environment, or if higher interest rates remain stubborn and weigh on highly valued shares, value investing could see a resurgence.

Adding a value-oriented global fund could offer diversification to portfolios that have become heavily tilted towards growth or a small group of large-cap US stocks. That’s not to say the US or big tech names won’t continue to do well, but if they don’t meet investor expectations from here, they could be prone to volatility.

In addition to ‘deep value’ companies, T. Rowe Price Global Value Equity’s managers invest in higher-quality businesses that they believe are temporarily undervalued. This broader and flexible approach creates a more balanced fund. A large part of the fund still invests in the US, given the breadth of that market, but other developed countries are featured as well as up to 10% in higher-risk emerging markets. It also has the flexibility to invest in smaller companies, which can increase return potential but add risk.

Performance over managers’ tenure for the T. Rowe Price Global Value Equity fund

Source: Lipper IM 31/10/2025.

Invesco Tactical Bond

Bonds have endured a volatile few years, but they remain an important diversifier and offer income opportunities too. Inflation has come down from its peaks, and many central banks are expected to continue cutting interest rates throughout 2026. This creates a more supportive backdrop for bond investors because as yields fall, prices typically rise.

Still, the path ahead is unlikely to be smooth. Economic growth is uneven, and political developments could add more twists to the outlook. In this setting, flexibility is key. Funds that can adjust their exposure to different types of bonds have the potential to make the most of opportunities alongside the potential to manage risk and volatility.

A nimble bond fund could be worth considering for portfolios looking to balance out equity exposure or add some defensive ballast. For this, we like the Invesco Tactical Bond fund.

The managers can invest in all types of bonds, with few constraints placed on them. This includes high yield and emerging markets bonds and derivatives, all of which add risk if used. The performance of the fund hinges on their ability to interpret the bigger economic picture, and they can alter the fund’s investments based on what they see. They aim to shelter the fund when they see tough times ahead and seek strong returns as more opportunities become available.

We think this is a good fund for exposure to the wider bond market. It takes away the hassle of deciding which type of bonds to invest in and when, because the managers are given the discretion to make these decisions for you. Over the long term the aim is to deliver a total return, through the combination of capital growth and income, rather than focusing purely on generating a high yield.

The last five FTSE All Share drawdowns over 10%

Past performance isn’t a guide to future returns.

Source: MorningStar 31/10/2025.

Liontrust UK Growth

This fund could be one for the contrarians out there. UK shares, particularly those of small and medium-sized companies, have struggled to keep pace with global markets for several years. What’s more, quality growth companies faced a difficult year in 2025. But this could present an opportunity for contrarian investors.

Investment styles move in and out of favour, and quality growth has lagged value and cyclical areas of the market – banks and defence companies had a noticeably strong year, while those usually favoured for their quality characteristics, such as consumer staples and utilities, have grown, but lagged. Yet companies with strong balance sheets, dependable cash flows and sustainable competitive advantages have tended to prove their mettle over the long run, especially when economic conditions are tougher.

While momentum may remain against this style in the short term, there’s potential for a turnaround as markets refocus on fundamentals or increased uncertainty leads to a focus on quality. For those willing to be patient, exposure to high-quality UK businesses could offer both resilience and recovery potential in the years ahead.

The managers of Liontrust UK Growth think the secret to successful investing is to find the few companies with an ‘economic advantage’ – a sustainable edge over the competition that will allow them to earn above-average profits for the long term. The fund’s focus on high quality companies means it’s tended to lag the broader stock market when it’s rising quickly but hold up better when markets fall.

The fund has the flexibility to invest in smaller companies and derivatives which if used, adds risk.

UK factors – one year performance

Past performance isn’t a guide to future returns.

Source: MorningStar 31/10/2025.

Annual percentage growth (%)

31/10/2020 To 31/10/2021

31/10/2021 To 31/10/2022

31/10/2022 To 31/10/2023

31/10/2023 To 31/10/2024

31/10/2024 To 31/10/2025

Schroder Managed Balanced

22.54

-12.51

2.98

14.55

15.80

IA Mixed Investment 40-85% Shares

20.13

-10.48

1.96

16.69

13.22

JPM Emerging Markets

6.04

-27.63

4.38

11.93

32.13

IA Global Emerging Markets

15.69

-18.88

6.26

15.63

23.29

T. Rowe Price Global Value Equity

33.43

2.28

0.01

18.92

20.19

IA Global

28.55

-8.93

1.73

22.20

14.06

Invesco Tactical Bond

5.42

-7.60

2.09

9.04

7.20

IA Sterling Strategic Bond

4.24

-14.01

2.98

11.70

7.11

Liontrust UK Growth

33.01

-2.59

3.10

8.01

7.19

IA UK All Companies

37.26

-13.07

3.44

17.85

15.07

Past performance isn’t a guide to future returns.

Source: Lipper IM 31/10/2025.